19 April 2015 | Online since 2003



29 July 2014|News

Milk price cuts 'must reflect market reality'


Farm gate price for milk must reflect the wider market for milk and dairy products and the performance of milk processors, according to the NFU.

It follows in the wake of a round of milk price cuts this summer – some of which the Union feels were unjustified.

If processors want longer-term farmer commitment, then the Union believes paying a price that reflects company performance will pay dividends rather than employing a policy of knee-jerk price changes in response to what others in the marketplace have done.

The Union is keen to hear from producers who are unclear about how their own specific price is being set and how the decisions on price changes are arrived at, to help it assess current understanding and what further steps it can take to improve the situation.

NFU Scotland’s Milk Policy Manager George Jamieson said: “The price that a milk processor can pay a farmer for his milk will vary depending on its ability to maximise market potential through its business plan and plant efficiency.

“Crucially for farmer suppliers, the price paid should be as much as the business can pay and not merely as much as they have to. Can we remind all processors that if they want long term commitment from farmer suppliers then they should set a price based on performance and not use competitors’ adjustments as an easy excuse to drop?

“This demands a transparent and open pricing structure which farmers can trust and understand. This must be a two way process with farmers and their representatives being fully aware of the wider markets, the performance of the processors they supply and how the farm gate milk price is arrived at.

“We are keen to hear from producers who are unclear about how their own specific price is set and how the decisions on price changes are arrived at, to help us assess current understanding and what further steps we can take with processors to improve this.”

Commenting specifically on the announcement that Arla amba has reduced its ‘on account’ price to UK members by 0.94p per litre, Gary Mitchell, chairman of NFU Scotland’s Milk Committee said that this was disappointing, but a reflection of the down turn in global markets.

Mr Mitchell said: “NFUS has met several times with Arla senior management and elected farmer members to help us understand the governance, democracy and pricing policy. That included the company sitting down in private with our milk committee.

“More recently, Arla and NFUS have agreed that a more intensive ‘work shop’ type meeting will help us fully understand exactly how its system works.

“It is vitally important for all players in the dairy supply chain to understand how prices are set and how each individual farm business price is derived. Farmers must be able to trust the price and be able to react to any changes in pricing policy, and that requires a full and open understanding of the process.

“The voluntary Code of practice on milk contracts has helped responsible processors and proactive farmers’ groups, PLCs and co-ops to improve dialogue and representation, but there is still much to do if we are to be a genuinely collaborative and competitive supply chain.

“Arla invested a significant amount of time and effort to engage with potential new members from Arla Foods Milk Partnership - and before that Milk Link - to explain how the Arla co-op system works and, with the move towards more alignment on pricing, there is a need to consolidate this work.

“Our work with Arla is a good example of recognising that farmers must fully understand pricing policy and detail if we are to develop more trusting and effective engagement between farmers and processor.

“Farmers must themselves be more active either via their elected farmer representatives, or get involved in either the co-op democratic structure or a PLC Producer Group. If they don’t have a producer group then they should ask why not? There are several excellent examples of effective, independent producer groups who are much more than simple price negotiators.”

Download



Comments


No comments posted yet. Be the first to post a comment

To post comment without approval login or register

Display name

Please enter your name

Email (optional)
Comment

Please enter your comment

Post Comment

Your comment submitted successfully.Please wait for admin approval.

Some error on your process.Please try one more time.



Jobs


16 April 2015
Farm Worker
Experienced Farm Worker required. For 140 cows robotic milking heard and poultry unit....

7 April 2015
Business Development Executive – Premium Snack Company – On Trade
My client is an award winning, growing Premium Snack company, which is constantly seeking out new premium pubs, hotels, delis...

8 April 2015
Assistant Manager
The Frogshole Farm is great because it has just been refurbished into a new Ember Inn in! Ember Inns are currently looking fo...

4 April 2015
Sales Apprentice
Business Administration, Accountancy, Agriculture, Construction, Customer Services, Dental Nursing, Electrical, Engineering, ...

8 April 2015
Apprentice Groom
General yard duties to include - mucking out Feeding Turning horses out and bringing in Grooming and checking of general well...





Related Companies


Top stories you may have missed
10 April 2015 | Agri Safety

Final phase of Scotland's war on BVD

The permanent eradication of Bovine Viral Diarrhoea [BVD] in Scottish cattl...


10 April 2015 | Dairy

Dairy farmers competitiveness will be te...

The abolition of milk quotas in Europe on 1st April has resulted in a numbe...


10 April 2015 | Cattle

EU milk sector growth 'dependent on expo...

The top 14 milk producing countries in Europe will increase their productio...


10 April 2015 | News

Could the rural vote hold the key to the...

Matt Ware is the NFU's head of government and parliamentary affairs, based ...


10 April 2015 | Arable

Action needed to boost farmgate prices i...

There is a 'desperate need' to improve farmgate returns given low incomes a...


9 April 2015 | Arable

OSR damage risks early Sclerotinia infec...

Rapid stem extension, after a slow start to spring, is likely to create spl...


9 April 2015 | Finance

Time for a farm rent revolution?

The time has come for landlords to expect to see reductions in farm rents, ...


8 April 2015 | Cattle

Cogent strengthens reputation for high c...

Cogent’s reputation as a source of the highest calibre sires has been enhan...


8 April 2015 | Arable

Exotic plant fungus a 'serious threat to...

The spread of exotic and aggressive strains of a plant fungus is presenting...


7 April 2015 | Animal Health

Share information to tackle food fraud, ...

The FSA’s new Food Crime Unit wants the industry to share information, some...